Bridging Finance News

It was the Conservative Government that originally launched Private Finance Initiative (PFI) but it was under the Labour Government that it did well. However, though this initiative was meant as a short-term cost saving scheme, many of its projects have become long-term liabilities for many departments.

According to a recent report released by the government, the PFI projects launched under NHS are creating liabilities of £50 billion more than the initial cost of the project. This is about 5-6 times more than the initial cost of the project. This has resulted from long-term contracts that had been drawn up with certain establishments.

It appears that long-term financial consequences far outweigh the project outcome. In departments such as NHS and Education, funds that were reserved for future projects are being diverted to historic projects.

It is not sure whether the UK government will stop PFI initiatives any time sooner, but the long-term repercussions of these projects will have an impact on the projects planned by NHS.

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Five advisers have received bans from the FSA for failings in relation to insurance fraud.

The regulator has also imposed one of its largest ever fines of £150,000 for insurance fraud on one of these individuals, and £50,000 on another.

Andrew Jeffery, director of Jeffery Flanders (Consulting) Limited has been banned and fined £150,000 – one of the largest fines imposed on an individual for insurance fraud.

Jeffery was found to have ‘recklessly’ failed to put in place insurance policies appropriately or, in some cases, at all, despite collecting payment from customers. In so doing, he exposed customers to risks such as not having adequate household or motor insurance.

The FSA said that this was particularly serious as many of the customers were elderly or vulnerable. The director also knowingly forged documentation and correspondence potentially to mislead insurance companies.

To complicate matters further, Jeffery then reportedly obstructed the FSA’s investigation by failing to report changes to the firm’s contact details, as well as not providing documents or attending meetings at the request of the FSA.

The second adviser to be banned has been named as Barrie Duncan Aspden. He has been banned from performing any regulated role in financial services after being found to have acted dishonestly and without integrity.

Aspden knowingly used approximately £300,000 of Orion client money to finance the creation of a new company “Click the Pepper”, an online motor insurance site, which traded as Peppercom. His actions meant that several hundred customers of Orion were put at risk of being uninsured because their premiums were misused.

Aspden’s conduct demonstrated a fundamental disregard for regulation. Having been made bankrupt and unable to obtain approved person status, Aspden put in place three directors at Orion and Peppercom including two relatives and a family friend. All three directors lacked the competence and skills to perform their roles. This enabled him to control the business without the relevant FSA approval.

Melanie Aspden, Barrie Aspden’s wife, and Gaenor Clayton, his sister-in-law, have also been banned for their failure to demonstrate competence and capability as directors at Orion and Peppercom.

They were not involved in decision-making or financial management but instead delegated these responsibilities to Barrie Aspden, an unapproved person.

They both failed to ensure client funds were used solely for the purposes they were provided for, resulting in Barrie Aspden using approximately £300,000 of Orion’s client money to fund the development of the Peppercom business.

Both Melanie Aspden and Gaenor Clayton admitted to not having the necessary experience for the director role. Had they not demonstrated financial hardship they would have each been fined £35,000.

Paul Willment, director and non-executive director of Orion and Peppercom, has been fined £50,000 and banned from financial services, also for his failure to demonstrate competence and capability.

Willment rarely attended Orion’s offices, had no active involvement in the management of the business and delegated his roles and duties to the unapproved employee Barrie Aspden.

Between September and November 2007, Barrie Aspden withdrew over £300,000 from Orion’s client money account to fund Peppercom’s development. Willment was aware of the transfers but did not challenge Aspden about it.

As a result, Aspden was able to commit insurance fraud.

Margaret Cole, director of enforcement and financial crime at the FSA, commented on the bans, saying: “These five individuals acted with complete disregard for the interests of their customers and the FSA’s regulatory requirements.

“Individuals holding a significant influence function role such as that of director must act with integrity as well as with the skill, care and diligence necessary to manage effectively the businesses for which they are responsible.

“The FSA does not tolerate these types of failings. We will continue to take action against those who commit insurance fraud, as well as those who fail to take action to prevent it.”

The actions of Barrie Aspden came to light following information that the FSA received through its whistle blowing line.

The FSA’s Small Firms and Contact Division looked into this further before referring the matter on to Enforcement for full investigation.

Since the beginning of this year, the FSA has banned 14 individuals for failings relating to insurance businesses, with fines totalling over £500,000.

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A two-up-two-down Victorian terraced house has been at the centre of a five-year-long dispute between a City Council, local residents, Beatles fans and its owner.

Number 9 Madryn Street in Toxteth, Liverpool, locally referred to as the ‘Welsh Streets’ area, is the birthplace of former Beatles drummer Ringo Starr.

Since 2005 Liverpool City Council has been trying to launch a regeneration project to redevelop the area, but has been met by a constant barrage of protests from those who believe the houses are too culturally significant to demolish.

Because it’s not just one part of the fab four’s home they want to keep, many people believe the 400 houses originally up for demolition represent an important part of the city’s heritage, as the area was once home to Welsh dockers who helped build the city.

The ‘Welsh Streets’ area is made up of streets and roads bearing Welsh titles, named so after the community of dockers that once lived there. Most of the properties are owned by Liverpool City Council, but number 9, Ringo’s first pad, is privately owned.

Originally, the number of houses set to be demolished was set at around 400, however, this figure has swung back and forth between 150 and 470 as various protests have succeeded and then failed. Now it has settled to 300, with 150 going in the redevelopment’s first phase, due to start this September, and another 150 in the second phase scheduled for early 2011.

One campaign, specifically aimed at saving Ringo’s house from demolition, failed despite the rock star himself speaking out against the plans to knock it down. The campaign prompted Liverpool City Council to say the house had “no historical significance”, because Ringo lived there only three months after his birth.

That was in 2007. Following that campaign, rumours emerged that 9 Madryn Street would be knocked down and re-built brick by brick and displayed as an exhibit at the Museum of Liverpool.

Those discussions are now on hold and official demolition notices have reappeared in the street. And if all goes to plan Madryn Street will be bulldozed in the second phase of the redevelopment.

According to the BBC, Liverpool City Council is in negotiations with the property owner, but could issue a compulsory purchase order (CPO) if necessary.

The council maintain that many of the houses are little more than slums and that the area is in dire need of regeneration.

“The properties in the Welsh Streets are in such a poor condition that demolition is the only option,” said a council spokesman.

“The city council owns 95% of the properties in this area and there are only two remaining residents who we are currently in discussions with.

“Once demolition is complete, high quality residential developments will be built of affordable homes for sale and socially-rented housing offering the modern desirable homes with gardens which local residents deserve.

“Regeneration will hopefully secure a brighter future for an area which has previously suffered from blight and abandonment.”

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Action Fraud, a service run by the National Fraud Authority, issued an alert last week, warning borrowers about a new type of fraud to have emerged recently.

The fraud is targeting those who have taken out a personal loan and involves the victim being sent a letter from a company with a similar name to an existing lender, or loan firm.

The letter states that the recipient has missed a repayment deadline and now owes the original debt plus more money.

However Action Fraud is urging people to be on their guard and to read their mail carefully, as some victims have already sent the requested money to the fraudsters, before finding they still owe the original company.

It is thought that the fraudsters are targeting heavily indebted areas.

According to the organisation, a number of victims contacted Action Fraud in just one day and the matter is now with the National Fraud Intelligence Bureau (NFIB).

Action Fraud takes crime reports from victims of fraud and provides them with a crime reference number. This information is then fed to the NFIB – run by the City of London Police – for analysis and possible police action.

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Girls Aloud singer and X Factor judge Cheryl Cole is reportedly putting her Surrey mansion on the market, following her separation from Ashley Cole.

The 27 year-old star is looking to downsize from the £3.5 million estate, according to a report in the Sun newspaper, and is on the hunt for a West London property close to Heathrow airport.

The historic property – which was used in World War II as a home for Canadian troops preparing the D-Day landings – is set to go on the market as soon as Cheryl and Ashley Cole’s divorce comes through.

The pop star and footballer bought the nine-bedroom mansion in October 2007, making numerous changes to the property – including a three-storey extension, five-a-side football pitch, garden pavilion and two oak-framed garages.

However, their planning application for an underground swimming pool, gym and spa was refused by Guildford Borough Council in October 2008, after it was deemed “a disproportionate addition” to the house, and “unacceptable”.

It was also reported in July that Ashley Cole had built a secret casino room at the mansion, to escape Cheryl’s mother, Joan Callaghan, who moved into the property when the Chelsea defender’s extramarital affairs were first discovered.

Cheryl is still living in the mansion with her mother, who has been helping her through a recent battle with the deadly illness malaria, however an unnamed source told the Sun she’s already looking for a new home.

“It will be a lot smaller than what she has now,” the source added. “She doesn’t need a huge estate.”

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